Raising a Strong Credit Culture

By. Ancin Cooley

A few weeks ago, my son got his first tricycle. After pedaling along the sidewalk, we stopped to learn about how to cross the street. He is two years old and not likely to be left unattended any time soon, but as anyone with children knows, it takes a lot of repetition to ensure he really “gets it.” I talked with him about first looking left, then looking right, and then always holding my hand to cross to the other side. We practiced it a few times more and then I let him return to riding his tricycle—his reward—since he is two, after all.

Yesterday, before we reached the end of the sidewalk and I could prompt him, he started saying, “Look left, look right, hold on tight!” This gave me confidence that he is internalizing the lesson and will remember it down the road, when I’m not there to supervise him. Of course, the end goal is to give him the skills and independence he needs to make the right decisions in a challenging environment.

In many ways, raising a child is a lot like cultivating an effective credit culture within your financial institution. To develop a strong one, it takes a lot of patience, nurturing, and a deep understanding of the institution’s unique personality. Ultimately, it isn’t hard to do because it is technical; it is hard to do because it requires discipline and absolute commitment to consistency across all communication, training, rewards, metrics, and most importantly, leadership. This is similar to how my spouse and I try to use similar approaches in our parenting so that we avoid sending mixed messages that can hurt our credibility. The expression “brutal consistency breeds believability” could not be truer for parenting or corporate leadership.

Yet this kind of disciplined commitment is the foundation of any institution’s credit risk management: a strong credit culture is what empowers employees to act consistently and in the spirit of its policies and expectations. “It provides lenders and credit approvers with a shared compass for navigating through gray areas, and helps maintain a balanced approach for prudent decision-making as the market ebbs and flows,” says Sageworks analyst and director of advisory services Tim McPeak.

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